Declarations and exemptions

The Insurance (Prudential Supervision) Act 2010 (the Act) includes general provisions relating to declarations and exemptions. The purpose of declarations and exemptions is to allow flexibility when applying the insurance prudential supervision regime where appropriate, provided certain conditions are met.

Information on which exemptions apply to each insurer can be found on the Register of licensed insurers in New Zealand.

When considering declarations or exemptions the Reserve Bank must take into account the purposes of the Act which are to promote the maintenance of a sound and efficient insurance sector and to promote public confidence in that sector. These purposes are achieved by establishing a system for licensing insurers, imposing prudential requirements on insurers, providing for the supervision by the Reserve Bank of compliance with those requirements and conferring certain powers on the Reserve Bank. Section 4 of the Act details the principles that apply in achieving the Act’s purpose, they are as follows:

  • the importance of insurance to members of the public in terms of their personal or business risk management;
  • the importance of maintaining the sustainability of the New Zealand insurance market;
  • the importance of dealing with an insurer in financial distress or other difficulties in a manner that aims to:
    • adequately protect the interests of its policyholders and the public interest; and
    • ensure that any failure, or possible failure, of the insurer does not have the potential to significantly damage the financial system or the economy of New Zealand;
  • the importance of recognising:
    • that it is not a purpose of this Act to eliminate all risk of insurer failure; and
    • that members of the public are responsible for their own decisions relating to insurance;
  • the desirability of providing to the public adequate information to enable members of the public to make those decisions;
  • the desirability of consistency in the treatment of similar institutions (while recognising that the New Zealand insurance market comprises a diversity of institutions);
  • the need to maintain competition within the insurance sector;
  • the need to avoid unnecessary compliance costs;
  • the desirability of sound governance of insurers;
  • the desirability of effective risk management by insurers.

Section 38 Exemption from requirement to supply Fit and Proper Certificate upon appointment of new Director

The Reserve Bank considers it appropriate to grant the exemption because either:

  • it is satisfied that the law or regulatory requirements of the home jurisdiction provide for an assessment of whether the persons appointed as directors are fit and proper persons to be appointed to that position and provide for the removal of a person from being a director if the overseas supervisor considers that the person is not a fit and proper person to hold the relevant position; or
  • the matters in section 38(2) of the Act may be treated as satisfied as the insurer is incorporated in Australia, Bermuda, Delaware (USA), France, Germany, Illinois (USA), India, Indiana (USA), Japan, the Netherlands and the United Kingdom, which are jurisdictions prescribed in regulation 5 of the Insurance (Prudential Supervision) Regulations 2010. Nebraska (USA), Rhode Island (USA), and Spain are also jurisdictions that are treated as satisfied in respect of matters in section 38(2).

Section 59 Exemption from compliance with Solvency Standard

The Reserve Bank considers it appropriate to grant the exemption because it is satisfied that:

  • the insurer is required under the law or regulatory requirements of its home jurisdiction to comply with standards or requirements that relate to the same or similar matters that are covered by the solvency standard or part of the solvency standard to which this exemption relates (the overseas standards or requirements); and
  • the overseas standards or requirements:
    1. cover the New Zealand business of the insurer; and
    2. are, in terms of achieving the purposes of the Act, at least as satisfactory as the solvency standard or part of the solvency standard to which this exemption relates; and
  • the nature and extent of prudential supervision that applies in respect of the overseas standards and requirements is, in terms of achieving the purposes of the Act, at least as satisfactory as the nature and extent of prudential supervision that applies to insurers incorporated in New Zealand in respect of the solvency standard to which this exemption relates.

Section 60(2A) Exemption from the requirement to have a current financial strength rating that is given by an approved rating agency

The Reserve Bank considers it appropriate to grant the exemption because it is satisfied that the insurer has ceased to enter into new contracts of insurance as an insurer.

Section 119 Exemption from compliance with Part 2, subpart 3, Statutory Funds

The Reserve Bank considers it appropriate to grant the exemption because it is satisfied that either:

  • the insurer is required, under the law or other regulatory requirements of its home jurisdiction, to maintain, in respect of its life insurance business, a statutory fund or other arrangement for separating its life insurance obligations from its other obligations; and
  • there is no overseas policyholder preference in relation to payments out of, or in respect of, the statutory fund or arrangement; and
  • the nature and extent of prudential supervision that applies in respect of the statutory fund or arrangement is, in terms of achieving the purposes of the Act, at least as satisfactory as the nature and extent of prudential supervision that applies in respect of statutory funds under subpart 3 of Part 2;

or

  • matters in section 119(2) of the Act may be treated as satisfied as the insurer is incorporated in Australia, which is a jurisdiction prescribed in regulation 5 of the Insurance (Prudential Supervision) Regulations 2010.

Section 204(4) Exemption for Lloyd's underwriters from the requirements contained in subpart 3 of Part 2 to have statutory funds for life insurance business

The Reserve Bank considers it appropriate to grant the exemption under section 204(4) because, after taking into account the nature of the Lloyd's market, it is satisfied that it would be unduly onerous or burdensome to impose the requirement on those underwriters.

Section 220(4) Exemption from the prohibition against certain words in a name

The Reserve Bank considers it appropriate to grant the exemption from prohibition from using certain words in their name because it is satisfied that the person:

  • will not be carrying on insurance business in New Zealand; and
  • has a legitimate reason to use the particular word in the person's name.

Maritime Mutual Insurance Association (NZ) Ltd

Medical Assurance Society KiwiSaver Plan

Medical Assurance Society Retirement Savings Plan

Insured Group Limited

Insure Minder Limited

Assure Legal Limited

Insurance Advocates Limited

Insureitssafe Limited

FoodAssured Limited

Assured Construction Limited

Assured Treasury Limited

Rest Assured Charitable Trust

Rest Assure Respite Trust Limited

Rest Assured Respite Trust Limited

Financial & Insurance Management Services Limited

Guardian Assurance Superannuation Plan

Commercial Union General Insurance Staff Pension

Assurezy Information Security Services Limited

Insurance Technologies Limited

Assured Safety Consulting Limited

Section 9 Declaration (relates to persons that are not carrying on insurance business in New Zealand in certain circumstances)

Ganson Management Ltd (PDF 103KB)